Political Economy of Renewable Energy Transition in Bangladesh
Citation: Raihan, S., Jahan, I., Ahmed, M. T., & Asaduzzaman, M. (2025). Political Economy of Renewable Energy Transition in Bangladesh. SANEM Publications, Dhaka, Bangladesh.
Bangladesh stands at a pivotal point in its energy transition as it seeks to achieve SDG 7—affordable and clean energy by 2030—by increasing the share of renewable energy (RE) in its total energy mix. Despite its potential, RE currently accounts for only 5% of electricity generation. The Renewable Energy Policy 2025 targets 20% of power from renewables by 2030 and 30% by 2040, but institutional inefficiencies and political economy barriers continue to hinder progress.
This study assesses the institutional quality and political economy dynamics of Bangladesh’s power and energy sector within the context of the renewable energy transition. It examines regulatory frameworks, pricing and subsidy policies, rent-seeking practices, and the roles of key actors through institutional review and stakeholder perception surveys. The findings reveal weak regulation, fragmented policies, centralised market structures, and limited private participation—largely dominated by state-owned entities such as BPDB and Petrobangla. Opaque decision-making and capacity payment obligations have led to inefficiency and fiscal stress.
The political settlement favours rapid expansion of fossil fuel–based capacity for short-term gains, creating a patronage-driven system that marginalises renewable energy. Deals in the sector are largely closed around fossil fuels, while renewable energy projects face regulatory uncertainty and bureaucratic inertia. Actor analysis shows a structural imbalance: influential actors have low interest in renewables, while committed actors like SREDA, IDCOL, and civil society possess limited influence.
Stakeholder surveys highlight the need for stronger institutional leadership, policy coherence, and political commitment. Key challenges include weak governance, limited financing, and entrenched fossil fuel interests, while opportunities lie in rural job creation and solar expansion. Addressing these barriers through institutional strengthening, transparent governance, incentive reforms, and collaboration among stakeholders is essential. A coherent, inclusive, and accountable policy framework can steer Bangladesh toward a sustainable, equitable, and resilient renewable energy future.